NMSU Business Outlook: April 2013

Film Incentives and Film Production Employment

Richard V. Adkisson

Between 1992 and 2009, 44 of the American states adopted incentive programs to encourage film production. The story behind this phenomenon is rich and complex. The primary focus of this article is to examine changes in film-production employment during a period when states were spending substantial treasure and effort to encourage film production.

Extreme Return Correlation and Volatility

In recent years numerous studies have found that financial markets are more volatile should be expected if returns followed a standard “bell” shaped normal curve. There are too many extreme values, either positive or negative. The tails are too fat if you like. Moreover, these extreme returns tend to come in clusters. This has important implications for investors, who face more risk than would otherwise be expected. We take the view that extreme returns occur along with non-extreme returns in clusters induced by related information. This view is motivated by observations in Mandelbrot that large changes in prices tend to be followed by large changes, of either sign, and vice versa. That is, financial returns commonly exhibit a few values very big or very small, arising in correspondence of market shocks. Usually, within a market shock (generally lasting a few days) we observe several extremes. This feature of financial markets is commonly referred to as volatility clustering.

Talking Points

Christopher A. Erickson

At the state level, it appears that the economy picked up in February, with employment growth moving into the positive for the first time in several months. This data, however, doesn’t reflect the Sequester, which is expected to adversely affect growth over the next year. Las Cruces data was mixed. The household survey shows employment growth at a healthy 1.4 percent, but the establishment survey indicates a decline in total jobs of -0.7 percent.